Feature / New world optimism

Department of Health deputy chief executive David Flory insists a strong NHS finance function is vital to the government’s vision for the NHS. Steve Brown reports

Finance staff in primary care trusts and strategic health authorities, and other support function colleagues, face major uncertainty in the transition to the ‘new world’ NHS set out in this summer’s white paper. Challenging management cost reductions will mean cuts in the short term in support functions. But with no detailed central blueprint for how consortia should look or operate, there is a fear finance staff may feel compelled to look for other career opportunities. And in the longer term vital finance skills will be lost to the NHS.

But, speaking exclusively to Healthcare Finance, the Department of Health’s financial leaders – David Flory, deputy chief executive and director general of NHS finance, performance and operations, and Bob Alexander, director of NHS finance – have made it clear that financial management is top of their agenda.

‘We are absolutely determined we are not going to get to the other side of implementing the white paper with an inadequate finance capability,’ says Mr Flory. ‘We are just not going to let that happen. An important part of us discharging our roles in this period is to ensure the new world is set up to deliver its objectives. It can only do that with the very best standards of financial management and capacity.’

He points to the significant improvement in recent years in NHS financial performance demonstrated again in the auditors’ local evaluation and use of resources scores (see page 13). ‘We are just not going to let that go by not paying proper attention,’ he says. ‘We will do everything we can to make sure the finance profession remains strong – and gets even stronger – through this period of change.’

Both Mr Flory and Mr Alexander say there is a logic to assuming an important role for a strong finance function. The white paper’s vision is built on maintaining control over resources and driving even better value for taxpayers’ money. And whatever the final configuration of new GP commissioning consortia and commissioning board, with whatever national and local structure, there is still £100bn to be managed, controlled, invested and accounted for.

‘The people in existing structures have, with their boards and partners locally, driven the improvement  we’ve seen in recent years,’ says Mr Flory. ‘That work still needs to be done.’

There can, however, be no guarantees. ‘I can’t say – and it would be completely wrong to say – that there is a job for everybody in the new world. The management cost reductions are real and need to be made. But there is a path for a lot of people and I hope a lot of people will make the transition to keep doing what they are doing because we need their capability in the way we’ve benefited from in recent years.’

He admits he is ‘concerned about retaining our people’ and promises more detail soon on how the new structures will operate, so people will be able to see their route in.

Mr Alexander underlines the message. ‘What we can do is to paint a compelling picture for finance staff. Financial control and the quality of financial management must be something we hold on to,’ he says. He too points to the white paper as evidence of the importance attached to financial management. ‘There will be some type of accreditation process,’ he says, ‘whereby consortia will need to have to demonstrate their ability to manage and get best value out of the resources at their disposal. Financial management capability will be pretty crucial in that accreditation view.’

Mr Alexander says he’d be ‘surprised’ if there were not some form of risk metrics approach taken with consortia. ‘Will it look like the Monitor regime? I don’t know. Would it use similar principles? Possibly. Will there be a backward-looking assessment? Clearly, we are still looking at the audit arrangements  for consortia, but in any audit arrangements I’d want auditors to give some view on the financial standing of a consortium.’

Size of finance function

As to how many finance staff will be needed, Mr Alexander stresses that the quantum of money hasn’t changed and activities that would be expected to be undertaken to manage, control and account for that money won’t change much either.

‘Some of the big things that need to be done don’t alter because we are changing the superstructure,’ he says. Some existing PCT finance staff will move with provider arms as part of the transforming community services changes. And finance will clearly take some of the hit on management cost reductions.

But the exact make-up of the finance function within commissioning will be dictated by the final structure of consortia and their decisions on how to operate. ‘I could see chains of consortia coming together to get all their business support from a shared function,’ he adds. ‘Or I could easily see a chief finance officer with a virtual team covering multiple consortia. Or an astonishingly large consortium justifiably having its own bespoke finance function.’

Echoing Mr Flory, he says the Department is determined the NHS will not take a backwards step on financial management. ‘We have a good legacy that no one wants to lose,’ he says.  ‘After all, you don’t want it to be your piece of jigsaw that gets lost down the back of the sofa.’